Exercise 18-9 Activities Cost Drivers Total Cost $39,390 25,920 21,420 $86,730 C
ID: 2473010 • Letter: E
Question
Exercise 18-9
Activities
Cost Drivers
Total Cost
$39,390
25,920
21,420
$86,730
Cost Drivers
Instruments
Gauges
Total
Overhead Rate
Instruments
Gauges
$
Exercise 18-9
Air United, Inc. manufactures two products: missile range instruments and space pressure gauges. During April, 49 range instruments and 296 pressure gauges were produced, and overhead costs of $86,730 were estimated. An analysis of estimated overhead costs reveals the following activities.Activities
Cost Drivers
Total Cost
1. Materials handling Number of requisitions$39,390
2. Machine setups Number of setups25,920
3. Quality inspections Number of inspections21,420
$86,730
The cost driver volume for each product was as follows.
Cost Drivers
Instruments
Gauges
Total
Number of requisitions 395 615 1,010 Number of setups 210 270 480 Number of inspections 225 285 510Explanation / Answer
Activities Activities Cost Drivers Total Cost $ Cost driver nos Cost per driver $ 1 Materials handling Number of requisitions 39,390 1,010 39 2 Machine setups Number of setups 25,920 480 54 3 Quality inspections Number of inspections 21,420 510 42 Cost Drivers cost per driver $ Instruments Total Cost-Instruments $ Gauges Total cost-Gauges $ Number of requisitions 39 395 15,405 615 23,985 Number of setups 54 210 11,340 270 14,580 Number of inspections 42 225 9,450 285 11,970 Total Cost 36,195 50,535
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